CRUDE oil prices climbed to an 18-month high yesterday as a major deal between Opec and other major producers to cut supply officially came into effect.

Prices for global benchmark Brent crude rose 2.4 per cent to 58.10 US dollars (£47.34) yesterday, marking its highest level since July 2015.

Investors were cheering the kick-off of a production cut deal struck by Opec and non-member oil-producing states including Russia late last year.

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The agreement – which was effective as of January 1 – is meant to address a supply glut in a bid to buoy floundering prices.

Brent crude fell as low as 27.26 US dollars per barrel (£22.20) in January 2016.

Nicholas Hyett, an equity analyst at Hargreaves Lansdown, said: “Twelve months ago, oil prices were eyeing their lowest prices in more than a decade. What a difference a year makes.

“Today Brent crude is flirting with 60 dollars for the first time in 18 months. That’s welcome news for heavily indebted E&P (exploration and production) companies such as Tullow Oil, up 4.4 per cent, where the extra cash will be key to cleaning up the balance sheet.”

In the UK, investor optimism also sent BP shares higher by 1.6 per cent and Royal Dutch Shell “B” shares up by 0.25 per cent.

But Bjarne Schieldrop, chief commodities analyst at Nordic corporate bank SEB, doubts the rally will last.

“While 2016 started bearishly and ended bullishly, we expect 2017 to be the opposite but not as extreme.”